Planogram

The end goal of a planogram is to increase your sales and profitability by ensuring that your shelf displays offer the right selection of products to reach your shoppers at the right place and time.

Facing allocations can be updated with seasons, special events and new assortments. Planograms also help your merchandisers to place products in a logical shopper-friendly fashion. Doing so improves the overall shopping experience of your customers in your store.

 

Planograms are designed a month or two before implementation. You must design them or redesign when:

• Seasons change;
• If you update your assortments;
• If you plan to open a new store; and
• When you refine your category management strategy.

Retailers first started using planograms due to increasing competition in the marketplace. As the retail environment expanded, category management evolved, which meant there was a need for retailers to adapt their merchandising strategy to remain relevant in the market and stay ahead of the competition.

Due to changing customer expectations, it was vital for the retailer to understand how and why the customer was shopping. They also needed to know how to translate what they found into a visual form of merchandising that would be appealing. Retailers also saw a greater need for a shelf planning tool to better measure, monitor and control sales performance. Such a tool could also provide a clearer understanding of the profits or losses encountered.

So retailers started drawing up plans for their shelves to improve the in-store presentation and differentiate themselves from their competitors by offering a different assortment to their customers. It also allowed retail groups to create consistency across their stores and improve stock control by better planning their shelves. As information technology evolved, Planogram Software solutions developed and could support planograms, generating further information on sales that could be easily read and understood.

There are a few reasons why you should use data-driven planograms. All of them revolve around these two objectives:

Firstly, data-driven planograms create a better shopping experience by meeting the demand and expectations of shoppers. Secondly, they improve the financial performance of the store.

That said, some of the major reasons for using planograms include:

 

1. SPACE ELASTIC DEMAND

The amount of space or facings allocated to a product has a significant impact on its sales. It is thus imperative to provide products that are both popular and profitable with enough space.

If the assortment is correct, then the shelf space allocated will return the highest profit (fast-moving products will be identified and allocated more shelf space).

 

2. CONSUMER BEHAVIOUR

Your customers make several decisions while they’re shopping, and an effective planogram can influence several of those decisions. Consumer Decision Trees are a tool for planogramming that map out their thought process when deciding what to purchase.

Developing planograms based on product performance and consumer decision trees in mind will help you to build optimised layouts that drive positive shopping behaviour.

 

3. STOCK CONTROL

Effective planograms ensure consistency of the days of supply for the products on a shelf. It makes the shelf replenishment cycle easier and results in decreased stock holding, reduced out of stocks, optimised stock rotation and increased inventory control.

For example, by using a product minimum display quantity, you can minimise the problem of running out of stock while also know when to place new orders.

Implementing data-driven planograms also helps you locate products that are selling well by comparing how much space each product receives versus how well they’re selling. By doing so, a space planner can attribute more facings to products that are performing well, which improves stock replenishment.

 

4. VISUAL APPEAL AND TACTICAL POSITIONING

Generating planograms that display products on the shelf in a visually appealing, logical and convenient way will help you attract and retain more shoppers.

Here are a few examples of tactics that you can use for positioning products on a shelf:

• Eye-level positioning of profit generators (leading brands and best sellers);
• Positioning of retail house brands next to the brand leader;
• Packing products from smallest to largest;
• Placing products on the shelves by price point, for example, premium to economy;
• Placing products by latest technology;
• Placing all product heights on the top shelves to be consistent;
• Packing big or heavy items on the bottom shelves for easy access and convenience;
• Making use of gondola ends for in-store promotions;
• Emphasising best sellers by attributing more facings;
• Creating incentives to trade-up higher margin products; and
• Using brand blocking, colour blocking and vertical merchandising.

 

5. MAXIMISE SALES PER SQUARE METRE

By taking into account how many days it takes for a particular product to sell out, you can balance the space on the shelf to the sales of each product. If the product takes longer to run out, give it less space and allocate that space to a product that sells out faster.

In this way, you can increase your sales and profits.

The short-term benefits of building and using data-driven planograms include:

• Better space allocation and, therefore, immediate increase in sales;
• Aesthetically pleasing displays that attract shoppers’ attention;
• Maximising selling potential for every inch of shelf space;
• Customers enjoy logical product flows that improve shopability for consumers; and
• Reduced inventory holding and out of stocks.

Customers are more likely to return to your stores when they know where to find the product they are looking for, regardless of which branch they are visiting.

Together with the above short-term benefits, there are also long-term benefits to building and using data-driven planograms. They include:

• A better grasp of product and category performance;
• Improved awareness of space value and space return;
• Significant increase in sales and stock rotation;
• Improved store consistency and shopper satisfaction; and
• A simplified and optimised product replenishment.

Increase your revenue by between 5% and 30% by giving your products data-driven space allocations and applying consistent merchandising principles across your stores.

With our category management services, you’ll get quick access to the expertise, software and process required to ensure you choose ideal category roles with matching category tactics reflected in your planograms.